Are You Looking for a High-Growth Dividend Stock?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
First Financial Bankshares in Focus
First Financial Bankshares (FFIN) is headquartered in Abilene, and is in the Finance sector. The stock has seen a price change of -0.66% since the start of the year. The commercial banker operating mostly in Texas is currently shelling out a dividend of $0.18 per share, with a dividend yield of 2.39%. This compares to the Banks - Southwest industry's yield of 0.91% and the S&P 500's yield of 1.59%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.72 is up 1.4% from last year. In the past five-year period, First Financial Bankshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.78%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. First Financial's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FFIN for this fiscal year. The Zacks Consensus Estimate for 2024 is $1.45 per share, with earnings expected to increase 4.32% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, FFIN presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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First Financial Bankshares, Inc. (FFIN) : Free Stock Analysis Report
